For companies managing leases, the implementation of ASC 842—a lease accounting standard issued by the Financial Accounting Standards Board (FASB)—marked a major shift in how lease obligations are recorded and reported. ASC 842 requires most leases to be recorded as assets and liabilities on the balance sheet, increasing transparency and financial accountability.
Complying with ASC 842 is complex, especially for businesses with multiple leases. Manual tracking through spreadsheets often leads to errors, inconsistencies, and audit challenges. That’s why many organizations are turning to ASC 842 software—a purpose-built solution designed to automate lease accounting and ensure accurate, compliant reporting.
What Is ASC 842 and Why It Matters
ASC 842 replaces the older ASC 840 standard and requires both operating and finance leases with terms longer than 12 months to be recognized on the balance sheet. This has significant implications for reporting obligations, financial ratios, and investor perception.
Failure to comply with ASC 842 can result in penalties, audit risks, and loss of stakeholder trust. As regulatory demands grow, software becomes an essential ally in navigating complex requirements with confidence.
Why Manual Compliance Is Risky
Many companies still rely on spreadsheets to track lease agreements and perform calculations for right-of-use (ROU) assets and lease liabilities. While this may work for small-scale operations, it becomes unsustainable when dealing with dozens or hundreds of lease contracts.
Key risks of manual tracking include:
- Calculation errors due to formula mistakes
- Incomplete or outdated lease records
- Difficulty keeping up with modifications and renewals
- Time-consuming audit preparation
- Limited visibility across departments
By contrast, ASC 842 software centralizes data, automates processes, and ensures compliance at scale.
Core Features of ASC 842 Software
To help organizations stay compliant, ASC 842 software offers several essential features:
- Centralized Lease Management: All lease agreements and data are stored in one system for easy access and control.
- Automated ROU & Liability Calculations: Accurate, consistent generation of amortization schedules, interest expenses, and straight-line rent calculations.
- Journal Entry Automation: Streamlined posting of lease-related transactions to your general ledger.
- Custom Reporting & Audit Trails: Built-in reports for disclosures, audits, and internal compliance checks.
- ERP Integration: Many solutions integrate with major ERP systems like NetSuite, SAP, Oracle, or Microsoft Dynamics.
These features save time, reduce errors, and provide full transparency for finance teams and auditors.
Top ASC 842 Software Solutions
Here are some of the most trusted tools in the ASC 842 software space:
- LeaseQuery: Tailored for accountants, offering strong compliance features and audit-ready reporting.
- Visual Lease: A flexible, scalable platform with contract lifecycle management and strong integration options.
- LeaseAccelerator: Ideal for large enterprises, focusing on global lease management and automation.
- Nakisa Lease Administration: Known for its SAP integration and real-time data syncing.
- ProLease: Combines lease accounting and real estate management for mid-sized businesses.
Each solution has its own strengths, so your choice should depend on your company’s size, industry, and internal systems.
How to Choose the Right ASC 842 Software
Selecting the right solution requires evaluating:
- Lease Volume & Complexity: Larger lease portfolios demand more robust features.
- Budget: Consider total cost of ownership, including training and implementation.
- Integration Needs: Ensure compatibility with your existing accounting or ERP systems.
- User Interface: A clean, intuitive UI helps reduce training time and errors.
- Customer Support & Updates: Choose a vendor known for responsive service and regular updates to match evolving standards.
A short pilot or demo can help your team assess usability before full adoption.
Making the Right Move: Adopt ASC 842 Software Now
ASC 842 software is no longer optional—it’s a necessity for any organization managing leases under modern accounting standards. The right software reduces compliance risk, improves financial accuracy, and enhances visibility across your lease portfolio.
If your company is still relying on spreadsheets, now is the time to explore automation. Investing in ASC 842 software not only simplifies your compliance journey but also strengthens your overall financial operations.